tag:blogger.com,1999:blog-1708908742323002823.post5386569837243603502..comments2024-02-10T02:18:27.240-08:00Comments on Trader Dan's Market Views: A Little bit of Fear?Trader Danhttp://www.blogger.com/profile/05484363461047659198noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-1708908742323002823.post-73000195111673537292013-02-21T23:14:42.075-08:002013-02-21T23:14:42.075-08:00Compare a chart of QE instances with the 10-year y...Compare a chart of QE instances with the 10-year yield. Yields have tended to go *up* during periods of QE.<br /><br />The yield on the 10-year went up from about 2.5% to nearly 4% when QE1 was in effect from early 2009 to mid-2010.<br /><br />As QE1 was winding down, it went back down to around 2.3%.<br /><br />Then when QE2 began, the 10-year yield went from that 2.5% in the fall of 2010 to about 3.4% in the spring of 2011.<br /><br />When QE2 ended, replaced only by Operation Twist, yields collapsed. They've only begun to recover again ... perhaps not coincidentally as QE3/4 has begun.<br /><br />If you don't believe me <a href="http://www.marketwatch.com/investing/bond/TMUBMUSD10Y?countrycode=BX" rel="nofollow">check the chart</a>.<br /><br />One can argue that yields would be higher without any QE, but that begs the question as to why they went *up* as each round of QE went into effect? The only time yields went or stayed low was when there was no Fed balance sheet expansion (such as the summer of 2010 and during Operation Twist).<br /><br />So basically, I'm saying the evidence shows that the Fed is *raising* the government's cost of borrowing by doing QE.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1708908742323002823.post-48735546295507175572013-02-21T22:51:24.809-08:002013-02-21T22:51:24.809-08:00Hi Dan,
I'd like to quote Clyve Maund here, a...Hi Dan,<br /><br />I'd like to quote Clyve Maund here, as it might mean that FED decided to sacrifice SP500 uptrend (and PMs) in order to herd hedge funds and other investors towards the most important asset of all, the Treasury Bond, in order to avoid a dollar collapse and a brutal increse of interest rates.<br />Do you agree with this vision?<br /><br />"The US Treasury market is the grand aorta of the US economy, which enables the goods and services of the rest of the world to be exchanged for piles of intrinsically worthless paper, thus allowing the US to live way beyond its means. As such, the Fed and US government can be expected to defend it with every means at their disposal. Right now it is under stress after its recent decline and in danger of crashing key support which could trigger a tidal wave of selling, as we can see on the chart below for the proxy iShares Barclays 20+year T-bond Fund. With both the dollar and Treasuries on the verge of tanking, it is clearly time for some really big levers to be pulled, and the most effective way to sluice funds into the dollar and Treasuries is to engineer another deflationary scare involving pulling the plug on the commodity and stockmarkets, and given the vastly greater importance of the Treasury market, the Fed would have no qualms about doing this. Such a scare would also provide a politically favorable environment for cranking up QE to even greater levels. While this is only a theory at this point, the logic behind it is plain – and it explains the current positions held by the powerful Commercials, who are at the top of the market food chain. "<br />Anonymoushttps://www.blogger.com/profile/00335835171576180359noreply@blogger.comtag:blogger.com,1999:blog-1708908742323002823.post-33069029298544171392013-02-21T20:43:25.188-08:002013-02-21T20:43:25.188-08:00"The projected deficit for this fiscal year i..."The projected deficit for this fiscal year is over $ONE TRILLION. In a deficit of this magnitude..."<br /><br />Not anymore. It might not seem like a big deal yet, but at least it's a step in the right direction.<br />- <a href="http://247wallst.com/2013/02/05/federal-deficit-to-fall-below-1-trillion-cbo/" rel="nofollow">2013 deficit pegged at $845 billion</a> -<br /><br />I suspect the markets simply used the FOMC minutes as an excuse for the much-needed correction.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-1708908742323002823.post-19328755182246801262013-02-21T12:33:00.012-08:002013-02-21T12:33:00.012-08:00Well that last comment was wiped away. Thank you D...Well that last comment was wiped away. Thank you Dan for your time efforts expertise and commentary. <br />Hedgies looking for the big waves this year. Buy Sell Buy Sell. The Fed is looking at any way to exit their madness without hope that rates will skyrocket and business will suddenly crater. If they do not buy the debt what kind of interest rates do you think the public/Chinese/heck anyone will buy the debt for? Awfully pricey. Me sees VIX and Gold going north. How about Semafo, AUY, down 8% up 6, down 5 up 9, poor poor hedgies..White Wolfhttps://www.blogger.com/profile/13965194184809848345noreply@blogger.com